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Owning Australian Foundation Investment Co Ltd (ASX: AFI<\/a>), or AFIC, shares could be a smart move for retirees because they can offer virtually everything an investor in retirement<\/a> could want. <\/p>\n If you haven’t heard of AFIC before, it’s a listed investment company (LIC)<\/a> that largely targets ASX shares for its portfolio.<\/p>\n Its goal is to provide shareholders with attractive investment returns through access to a growing stream of fully-franked<\/a>\u00a0dividends<\/a>,\u00a0as well as growing the capital value over the medium to long term. <\/p>\n This is not meant to be a short-term investment \u2013 AFIC believes the suggested investment period is five to 10 years. <\/p>\n Let’s get into why AFIC shares are an appealing pick for retirees.<\/p>\n Diversification <\/p>\n The LIC can offer investors exposure to a portfolio of businesses, with a weighting towards large businesses. Its top 25 holdings account for 79.5% of the portfolio. <\/p>\n While these companies may not be small, rapidly growing businesses, they can provide stability and strength.<\/p>\n AFIC has been operating for almost a century and has built up a large position in many of Australia’s\u00a0blue-chip stocks<\/a>. Its total portfolio value is worth around $10 billion, and its blue-chip positions, worth at least 3% of the portfolio at the end of December, include:<\/p>\n The overall AFIC portfolio is more diversified than the S&P\/ASX 300 Index (ASX: XKO) in terms of the spread of sector allocation. There are four sectors that have a double-digit weighting \u2013 ASX bank shares<\/a> (21.1%), ASX mining shares<\/a> (15.2%), ASX industrials shares (12.3%), and ASX healthcare shares<\/a> (11.3%).<\/p>\n I’d imagine plenty of retirees have all of their money in just one or a few properties, which isn’t very diversified at all. Adding AFIC shares could be very helpful for diversification<\/a>.<\/p>\n Reliable income <\/p>\n In retirement, I’d like to have a reliable source of dividend cash flow hitting my bank account.<\/p>\n While dividends aren’t guaranteed, I think AFIC shares can provide a pleasing source of passive income<\/a>. There hasn’t been one payout cut this century from AFIC, making it one of the most reliable ASX dividend shares<\/a> around.<\/p>\n The business increased its regular annual payout from 26 cents per share in FY24 to 26.5 cents per share in FY25. That translates into a grossed-up dividend yield<\/a> of 5.3%, including franking credits<\/a>.<\/p>\n There are a few businesses on the ASX that have been as reliable as AFIC over the last 25 years, which I think is reassuring for Australian retirees.<\/p>\n A cheap price <\/p>\n I like being able to buy assets for cheaper than they’re worth.<\/p>\n